18 May 2023
Technology companies looking to invest in Wales are being put off from doing so by the UK Government’s continued delay in publishing a Semiconductor Strategy, warns the Welsh Government’s Economy Minister Vaughan Gething.
With the support of both the Welsh and UK Governments, South Wales has developed a cluster of activity specializing in compound semiconductors, one of the UK’s key strengths in microelectronics.
In a letter to the interim Secretary of State for Science, Innovation and Technology Chloe Smith MP, the Minister said the Welsh Government is in active dialogue with several companies with interest in investing further in Wales to develop or grow a presence in the semiconductor cluster and build on the existing business and academic ecosystem. However, the absence of a UK strategy for the sector, particularly when compared with the significant plans set out in the USA and the European Union (EU), is increasingly a problem. As a result, the Welsh Government is seeing investment plans paused, with the lack of a UK strategy being cited as a key factor.
“The semiconductor sector requires long-term investment. Companies, and indeed the Welsh Government, need to understand the UK commitment to this industry at the earliest opportunity. If not, investment decisions will be made elsewhere,” said Gething.
“I would hope the strategy contains a significant investment commitment by the UK Government that will be proportionate to the commitments being made in the US and EU. In investing in the UK’s strengths, I would wish to see compound semiconductors recognized as a priority for investment, and Wales’ cluster confirmed as a destination for that investment,” he added.
“The strategy will, I expect, commit to developing our R&D and skills for the sector, but it should also commit to building the infrastructure that enables the industry to grow and develop. It is crucial that the strategy sets out how the UK can support companies in a way that prevents the leakage of activity overseas.”
Gething also drew the Secretary of State’s attention to the situation at Nexperia/Newport Waferfab in Newport, South Wales. As a result of a Security and Investment Order, the future of that plant (one of the largest wafer fabs left in the UK) is uncertain.
“The Semiconductor Strategy needs to offer sufficient confidence to the industry, the Welsh Government and local government — who all have a decision-making role in securing the sector’s future — in a way that is supported by clarity from the UK Government on relevant security matters,” said Gething.
“The industry is facing real volatility, and the absence of a strategy aggravates the particular uncertainty the workforce in Newport faces and our ability to secure the jobs and skills that are essential to a strong cluster in the long term,” he added.
“At no point has the Welsh Government sought to interfere with security matters in these areas. We have been clear throughout this process that those decisions are rightly matters for UK Ministers. However, urgent progress is now required to ensure prospective investors can take on this key site, preserve hundreds of high-value jobs, and protect the capability the plant offers to the sector in the UK.”
Gething has called for a meeting with the Secretary of State to discuss the planned next steps for the sector, so that Ministers from both governments are able to design a more collaborative and strategic approach that maximizes the contribution of a sector that is crucial to boosting economic growth, reducing costs and protecting the interests of businesses and communities across the UK.
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